Escalating tensions in the Middle East have roiled global energy markets, and now, dire warnings are looming over oil prices. Macquarie Group analysts say the current situation is being underestimated. If the situation does not improve, crude oil prices could reach not only $150, but potentially even $200 per barrel.
Warning: Prices can reach $200—not just $150
According to Bloomberg, a March 27 report suggests that if the Strait of Hormuz remains closed for a long time, it would have a major impact on global supply, leading to a severe shortage of available oil relative to demand. This could lead to a historic surge in prices. According to experts, what happens next will depend on three main factors:
* How long does the Strait of Hormuz remain closed?
* How much damage is caused to energy infrastructure
* How quickly supply chains return to normal
Impact of closure of the Strait of Hormuz
For now, Brent crude remains around $107 a barrel, down from its recent high of $119.50; However, history has shown how quickly prices can rise if conditions worsen. In 2008, prices rose to $146 per barrel. In fact, about 20% of the world’s oil supply passes through this route—the Strait of Hormuz. As a result, any disruption in this route will have a direct and immediate impact on the entire global economy.
Meanwhile, the ongoing standoff between Iran, the United States, and Israel has been going on for nearly four weeks now, and tensions continue to rise. Although Donald Trump has indicated that attacks may be postponed for the time being, there are no clear signs that the conflict is about to end. Under these circumstances, if this conflict prolongs, the world may not only have to bear the burden of expensive oil, but may also face a major economic shock.
